1974 (6) TMI 34 - HC - VAT and Sales Tax

Summary

Issues: Assessment of sales tax, imposition of penalties under sections 8(2) and 43(1) of the Act

The judgment delivered by the Madhya Pradesh High Court involved an appeal by an appellant who manufactures and sells bidis and was assessed to sales tax under the Madhya Pradesh General Sales-tax Act for the Diwali year 1966-67. The gross turnover was determined, deductions were allowed, and the taxable turnover was calculated. The appellant was assessed a tax amount and penalties under sections 8(2) and 43(1) of the Act. The appellant's first contention was against the imposition of the penalty under section 8(2) of the Act, arguing that no declaration had been given to the Forest Department as required, hence the penalty was unjustified. The court found merit in this contention as it was acknowledged that no declaration had been submitted, and the burden of proof was on the Department, not the dealer, to show non-compliance with the provision.

Furthermore, section 8(1) of the Act provides for concessional rates of tax on raw materials subject to prescribed conditions. The court highlighted that the dealer must submit a true declaration filled in and signed by the purchasing dealer under Form 12-A to avail the concessional rate. Since no declaration was furnished, the court concluded that the penalty imposed under section 8(2) was unwarranted. Moving on to the penalty imposed under section 43(1) of the Act, the appellant contended that certain purchases from unregistered dealers were not included in the returns due to a clerical error, and the penalty was excessive. However, the court disagreed, noting that the appellant, being a significant bidi merchant, should have been aware of the requirement to pay purchase tax on such transactions. The court found the penalty justified, especially considering the significant amount of purchase tax that was not paid. As a result, the appeal was partly allowed, setting aside the penalty imposed under section 8(2) while confirming the penalty under section 43(1) of the Act.